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Mandatory Interim Administrator Planning for Lawyers Coming in 2023

By Rebekah Page-Gourley posted 10 days ago

  

On June 15, 2022, the Michigan Supreme Court issued ADM File No 2020-15, amending State Bar Rule 2, adding State Bar Rule 21, adding Subchapter 9.300 of the Michigan Court Rules, and amending MCR 9.119. The amendments, effective September 1, 2023, require attorneys in private practice to designate an interim administrator “to protect clients by temporarily managing the attorney’s practice if the attorney becomes unexpectedly unable to practice law.” State Bar Rule 21(A). The State Bar of Michigan (SBM) Receivership Workgroup 2019 recommendation indicated that many Michigan attorneys do not have a sufficient plan in place to protect their clients in the event of the attorney’s death, disability, or disciplinary action. These amendments are an effort to ensure that this planning takes place.

Rules Concerning the State Bar of Michigan Amendments

In addition to the previously required information (e.g., name, address, etc.) in their annual licensing statement, Michigan attorneys must provide a certification regarding whether they are in private practice. State Bar Rule 2(B). Those who are in private practice must include, in addition to the required disclosure about whether they maintain a trust account for client and third-party funds, a designation of their interim administrator pursuant to new State Bar Rule 21. State Bar Rule 2(B)(2).

New State Bar Rule 21(A) provides that such an interim administrator designation includes

  • naming another active Michigan attorney in good standing (or a firm with at least one other active Michigan attorney in good standing) as their interim administrator and
  • identifying a person (who may be the same person designated as the interim administrator) “with knowledge of the location of the attorney’s professional paper and electronic files and records and knowledge of the location of passwords and other security protocols required to access the attorney’s professional electronic records and files.”

The new rule requires the State Bar of Michigan to create a confirmation process for designated interim administrators and to maintain a list of members who have indicated a willingness to serve as an interim administrator. State Bar Rule 21(A), (C). Attorneys who wish to use this list (instead of choosing their own interim administrator) must pay a fee of $60 to the SBM every time they choose that option. State Bar Rule 21(B). The bar must submit a report on the implementation of the Interim Administrator Program by January 1, 2024, including an accounting of the funds received from attorneys using the list. State Bar Rule 21(E).

Michigan Court Rule Amendments

The former receivership rule outlined in MCR 9.119(G) is deleted under the amendments. New Subchapter 9.300, Interim Administrators, includes the following key provisions:

  • MCR 9.301 defines a number of key terms, including “Affected Attorney,” who is someone who has resigned, been disbarred or suspended, disappeared, been imprisoned, abandoned law practice, become disabled or incapacitated, been transferred to disability in active status, or has died.
  • MCR 9.303 describes the circumstances under which an affected attorney’s firm may continue to represent the affected attorney’s clients without the appointment of an interim administrator.
  • MCR 9.305 outlines the process of the appointment of an interim administrator, which is commenced by filing a petition in the circuit court.
  • MCR 9.307 outlines the duties and powers of the interim administrator, including the duty to file an inventory of the affected attorney’s trust accounts within 35 days after the entry of the appointment; to account for “all receipts, disbursements, and distributions of money and property for the Affected Attorney”; and to file a written report and final accounting with the court and serve a copy of each on the SBM.
  • MCR 9.309 provides that while the “appointment of the Interim Administrator does not automatically create an attorney and client relationship between the Interim Administrator and any of the Affected Attorney’s Clients,” the attorney-client privilege “applies to all communications by or to the Interim Administrator and the Affected Attorney’s Clients to the same extent as it would have applied to any communications by or to the Affected Attorney with those same clients.” Under the rule, interim administrators are governed by MRPC 1.6.
  • MCR 9.311 provides that the circuit court has jurisdiction over the affected attorney’s files, records, and property. The interim administrator is authorized to maintain documents in either paper or electronic format and may destroy client documents “pursuant to the law office file retention policy or as necessary to meet ethical obligations.”
  • MCR 9.313 outlines the interim administrator’s entitlement to compensation and reimbursement and the processes required.
  • MCR 9.315 provides that the interim administrator must have professional liability insurance covering their conduct as an interim administrator.
  • MCR 9.317 clarifies that interim administrators may not represent clients of the affected attorney without informed written consent, other than to temporarily protect the interests of the client. “Any informed written consent by the Affected Client must include an acknowledgment that the client is not obligated to retain the Interim Administrator.”
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